HONG KONG (AFX-ASIA) – China Petroleum & Chemical Corp (Sinopec) said it will get 663 petrol stations and an oil depot from its parent Sinopec Group Co through an asset swap, which could boost its pretax profit by 60.36 million yuan a year. (US$1=8.28 yuan). The assets are valued at 1.031 billion yuan.

Sinopec is expected to see its pretax profit boosted by 26.1 million yuan a year following the asset swap as it will no longer need to lease 611 of the 663 gasoline stations.

In addition, some 5.55 million yuan in profit from the remaining 52 gasoline stations will be reflected in Sinopec’s book.

Sinopec will in turn transfer the geology and geophyscial exploration assets of certain oilfields and water plants, with a net asset value of 1.028 billion yuan, to its parent.

The shortfall in value arising from the assets swap totaling 2.132 billion yuan will be paid in cash by the company to its parent.

Sinopec said the asset swap is a continuation of a restructuring plan set at the time of its listing. It will help streamline the operational relationship between Sinopec and Sinopec Group and reduce connected transactions between them.

Kenny Tang, associate director of Tung Tai Securities, said Sinoc Corp will not benefit much from the asset swap in the near term.

“The company will get some petrol stations and an oil depot from its parent. However, they will not contribute very strong earnings to the company in the short term,” he said.

However, Mr Tang said the asset swap will help Sinopec Corp develop its downstream oil business in the longer term.

Under the asset swap, Sinopec Corp will get 663 petrol stations and an oil depot from its parent Sinopec Group Co. The asset are valued at 1.031 billion yuan.

Sinopec will in turn transfer the geology and geophyscial exploration assets of certain oilfields and water plants, with a net asset value of 1.028 billion yuan, to its parent.

The shortfall in value arising from the assets swap totaling 2.132 billion yuan will be paid in cash by the company to its parent.